Hinman's Insights: How The Former SEC Director Shaped Crypto Regulatory Landscape

William Hinman, the former director of the U.S. Securities and Exchange Commission's (SEC) Division of Corporation Finance, discussed with Ethereum ETH/USD co-founder Vitalik Buterin in 2018 about how the Ethereum Foundation operates.

Documents show how Hinman, at the time, believed Ethereum's native currency didn't warrant being regulated as a security.

Ripple Labs XRP/USD has repeatedly cited this position in defense against the SEC’s recent claims.

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The documents shed light on the internal conversations within the SEC leading up to Hinman's speech, where he put forth the view that Bitcoin BTC/USD and Ether were not securities.

A revelation from an email that surfaced on Tuesday stated that an official from the SEC was keen to assert that they did “not … see a need to regulate Ether” in its 2018 form.

Former SEC Director of Trading and Markets, Brett Redfearn, said in 2018: “As written, the language remains vague as to whether ETH is a security. If you want to make an affirmative statement that it is not a security, the language could be stronger (i.e., just say it). If you don't want to take an affirmative stance, we suggest using language similar to what you used for Bitcoin re. the disclosure regime to make it more consistent.”

Redfearn further annotated a draft of the speech, mentioning that parts of it “appear likely to create more confusion about the status of ETH.”

Valerie Szczepanik, who currently presides over the SEC’s FinHub group, suggested in an email dated May 25, 2018, “the less detail the better,” regarding what seems to be one of the initial drafts of the speech. 

Laura Jarsulic, an attorney from the SEC’s Office of General Counsel, cited in an email from June 12 the Supreme Court case: SEC v. W. J. Howey Co. She recommended clarifying that the Supreme Court determined that only the purchase of land and service contracts constituted the buying of security.

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